Broadcasters show no new revenue initiatives

I can’t tell you how happy I am that Diane Mermigas is back on the reporting front lines. Nobody understands the mess broadcasting is in like Diane, and she’s able to say it in a way that cuts through all the bullshit we hear from everybody else. Her latest for The Hollywood Reporter paints a chilling portrait of an industry out of touch with reality. The fatal flaw of broadcasters, she writes, is the absence of any balance sheet efforts to “to save themselves by trying to leverage their unique local advertiser, community and consumer connections in a digital broadband world.” Amen, Diane. Amen.

There is one other place where all media and entertainment companies should demonstrate some balance sheet initiative, and that is in grooming existing content or creating new content for digital interactive gold mining. There was little evidence of such investments in the first quarter.

This is precisely what I tell my clients and why I feel so strongly about the trap of convergence advertising. We absolutely MUST be building new businesses and revenue streams that will augment the shrinking pie that is television advertising. Here’s a great piece of truth from Diane:

Despite the upfront 10% gain expected by ABC, 2% gain expected from CBS, 17% loss expected from NBC and the 8% loss expected from Fox, the broadcast networks overall this year will continue to lose traction against the cable networks, which could increase their collective share by $19 billion total upfront dollars to 38%, according to ad guru Jack Myers.

So, even when a broadcast network wins these days, as CBS and ABC are, the best they can hope for is a larger share of a shrinking pie.

The broadcast upfront begins this week, and the projected revenue picture will be clearer in the weeks ahead. Last year, Starcom Mediavest Group’s Tim Hanlon said that 2005 would be the “nervous breakdown year” for broadcasters. Emmis has already decided it wants out and is offering its stations for sale. There will be more, and the shame is that these people can’t see there’s a way out.

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I blog for two reasons. One, it is the greatest method ever created to challenge my own assumptions, something that I believe is necessary for anyone who wishes a seat at the discussion table... Read More…